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EXHIBIT 4.14
THIS AGREEMENT is made and entered into as of this 14th day of August,
1998, by and among Xxxx Xxxxx, Xxxxx Energy Resources, Ltd., EnCap Equity 1994
Limited Partnership and Energy Capital Investment Company PLC.
WHEREAS, the undersigned are shareholders of Future Petroleum
Corporation, a Utah corporation ("Future"); and
WHEREAS, the undersigned deem it in their mutual best interests to
enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, the undersigned do hereby agree that, in
their capacities as shareholders of Future, the undersigned will cause the Board
of Directors to adopt an amendment to the Bylaws of Future substantially in the
form of the instrument attached hereto as Exhibit A.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the above date.
/s/ XXXX XXXXX
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Xxxx Xxxxx
XXXXX ENERGY RESOURCES, LTD.
By: Xxxxx Operating Company
By: /s/ XXX X. XXXX
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Xxx X. Xxxx, President
ENCAP EQUITY 1994 LIMITED PARTNERSHIP
By: EnCap Investments, L.C.
By: /s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx, Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: /s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx, Director
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Section [ ]. For so long as the Xxxxx Group is entitled to nominate one
or more persons to the Board of Directors of the Company as provided in the
Shareholders' Agreement, dated August 14, 1998, among the Company, Xxxxx Energy
Resources, Ltd., a Texas limited partnership ("Xxxxx"), and certain other
shareholders of the Company ("Shareholders' Agreement"), without the approval of
one of the directors nominated by the Xxxxx Group (which shall be in addition to
any other corporate action required by the Articles of Incorporation, these
By-Laws or by applicable law):
(a) The Company will not, and will not permit any Subsidiary thereof,
in any manner to owe or be liable for Indebtedness except:
(i) the Obligations;
(ii) the Senior Credit Facility;
(iii) obligations under operating leases entered into in the
ordinary course of the Company's or its Subsidiaries' business in arm's length
transactions at competitive market rates under competitive terms and conditions
in all respects;
(iv) Indebtedness owed by the Company or any Subsidiary thereof
which is subordinated to the Obligations upon terms and conditions satisfactory
to ECIC and EnCap LP in their sole and absolute discretion;
(v) purchase money Indebtedness in an aggregate principal amount
not to exceed $200,000 at any time, provided that the original principal amount
of any such Indebtedness shall not be in excess of the purchase price of the
asset acquired thereby and such Indebtedness shall be secured only by the
acquired asset;
(vi) Indebtedness in the principal amount of approximately $20,000
owed to Bank One Texas on a workover rig; and
(vii) Indebtedness in the principal amount of approximately $20,000
owed to Xxx Xxxxxxxxx.
(b) The Company will not, and will not permit its Subsidiaries to,
merge or consolidate with or into any other business entity. Any Subsidiary of
the Company may, however, be merged into or consolidated with either the Company
or another Subsidiary which is wholly-owned by the Company, so long as the
Company or the Subsidiary wholly-owned by the Company is the surviving business
entity. The Company will not issue any securities other than shares of its
common stock or any options or warrants giving the holders thereof only the
right to acquire such shares. No Subsidiary of the Company will issue any
additional shares of its capital stock or other securities or any options,
warrants or other rights to acquire such additional shares or other securities
except to the Company. No Subsidiary of the Company which is a partnership will
allow any diminution of the Company's interest (direct or indirect) therein.
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(c) The Company will not, and will not permit any Subsidiary to, sell,
transfer, lease, exchange, alienate or dispose of any Collateral except:
(i) equipment which is worthless or obsolete or which is replaced
by equipment of equal suitability and value;
(ii) inventory (including oil and gas sold as produced and seismic
data) which is sold in the ordinary course of business on ordinary trade terms;
or
(iii) other property which is sold for fair consideration not in
the aggregate in excess of $500,000 in any Fiscal Year (commencing with Fiscal
Year 1998)
(d) The Company will not, and will not permit Subsidiary to, make any
expenditure or commitment or incur any obligation or enter into or engage in any
transaction except in the ordinary course of business (which ordinary course of
business includes the acquisition, directly or indirectly, of oil and gas
properties), engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present businesses and
operations, make any acquisitions of or capital contributions to or other
investments in any person, other than Permitted Investments, or make any
significant acquisitions or investments in any properties other than oil and gas
properties.
(e) The Company will not, and will not permit any of its Subsidiaries
to, engage in any material transaction with any of its Affiliates on terms which
are less favorable to it than those which would have been obtainable at the time
in arms-length dealing with persons other than such Affiliates, provided that
such restriction shall not apply to transactions among the Company and its
wholly-owned Subsidiaries.
(f) The Company will not, and will not permit any of its Subsidiaries
to, declare or make, or incur any liability to declare or make, any Restricted
Payment.
(g) The Company will not amend, whether by amendment, supplement or
renewal, the terms of the Note Documents as they relate to the amortization of
Indebtedness under such Note Documents, the principal amount of Indebtedness
under such Note Documents or the interest or premium payable with respect to
such Indebtedness.
Section [ ]. As used in this Article [ ] of the By-Laws, the following
terms shall have the meanings set forth below:
"Affiliate" shall mean, when used with respect to another person, any
person directly or indirectly controlling, controlled by or under common control
with such other person.
"Amended Security Documents" has the meaning set forth in the Renewal
Note Agreement.
"Xxxxx Group" has the meaning set forth in the Shareholders' Agreement.
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"Collateral" has the meaning set forth in the Renewal Note Agreement.
"ECIC" means Energy Capital Investment Company PLC, an English
investment company.
"EnCap LP" means EnCap Equity 1994 Limited Partnership, a Texas limited
partnership.
"Fiscal Year" means the 12 month period ending December 31 of any year.
"Further Renewal Notes" shall have the meaning set forth in the Renewal
Note Agreement.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or generally recognized successor) and which, in the case of the Company
and its consolidated subsidiaries, are applied for periods after the date hereof
in a manner consistent with the manner in which such principles were applied
prior to the date hereof.
"Indebtedness" of any person means Liabilities in any of the following
categories: (a) Liabilities for borrowed money; (b) Liabilities constituting an
obligation to pay the deferred purchase price of property or services; (c)
Liabilities evidenced by a bond, debenture, note or similar instrument; (d)
Liabilities which would under GAAP be shown on such person's balance sheet as a
liability, and is payable more than one year from the date of creation thereof
(other than reserves for taxes and reserves for contingent obligations); (e)
Liabilities arising under futures contracts, forward contracts, swap, cap or
collar contracts, option contracts, hedging contracts, other derivative
contracts, or similar agreements; (f) Liabilities constituting principal under
leases capitalized in accordance with GAAP; (g) Liabilities arising under
conditional sales or other title retention agreements; (h) Liabilities owing
under direct or indirect guaranties of Liabilities of any other person or
constituting obligations to purchase or acquire or to otherwise protect or
insure a creditor against loss in respect of Liabilities of any other person
(such as obligations under working capital maintenance agreements, agreements to
keep-well, or agreements to purchase Liabilities, assets, goods, securities or
services), but excluding endorsements in the ordinary course of business of
negotiable instruments in the course of collection; (i) Liabilities (for
example, repurchase agreements) consisting of an obligation to purchase
securities or other property, if such Liabilities arise out of or in connection
with the sale of the same or similar securities or property; (j) Liabilities
with respect to letters of credit or applications or reimbursement agreements
therefor; (k) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such person or for the creation of which such
person directly or indirectly received payment), or (l) Liabilities with respect
to other obligations to deliver goods or services in consideration of advance
payments therefor; provided, however, that the "Indebtedness" of any person
shall not include Liabilities that were incurred by such person on ordinary
trade terms to vendors, suppliers, or other persons providing goods and services
for use by such person in the ordinary course of its business, unless and until
such Liabilities are outstanding more than 90 days past the original invoice or
billing date therefor.
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"Liabilities" shall mean, as to any person, all indebtedness,
liabilities and obligations of such person, whether mature or unmatured,
liquidated or unliquidated, primary or secondary, direct or absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Note Documents" shall mean the Renewal Note Agreement, the Further
Renewal Notes and the Amended Security Documents as defined in the Renewal Note
Agreement, and all other agreements, certificates, documents, commitments and
writings at any time delivered in connection herewith or therewith.
"Obligations" shall mean all Liabilities owing ECIC and EnCap LP under
or pursuant to the Renewal Note Agreement, the Further Renewal Notes or any of
the other Note Documents.
"Permitted Investment" shall mean any investment, loan, advance,
guaranty or capital contribution by the Company or any Subsidiary in any of the
following: (a) properties or assets to be used in the ordinary course of
business of the Company and its Subsidiaries; (b) current assets arising from
the sale of goods and services in the ordinary course of business of the Company
and its Subsidiaries; (c) investments in one or more of the Company's
Subsidiaries or in any person that concurrently with such investment becomes a
Subsidiary; (d) any marketable obligation maturing not later than one year after
the date of acquisition therefor, issued or guaranteed by the United States of
America or by any agency of the United States of America which has the full
faith and credit of the Untied States of America; (e) commercial paper which is
given the highest rating by a credit rating agency of recognized national
standing and maturing not more than 270 days from the date of creation thereof;
and (f) any demand deposit or time deposit (including certificates of deposit
and money market or sweep accounts) with a commercial bank or trust company
organized and doing business under the laws of the United States of America or
any state thereof which has capital, surplus and undivided profits of at least
$250,000,000, provided that such deposit must be either payable on demand or
mature not more than twelve months from the date of investment therein.
"Renewal Note Agreement" shall mean that certain Note Restructuring
Agreement, dated August 14, 1998, among the Company, ECIC, EnCap LP and Gecko
Booty 1994 Limited Partnership, a Texas limited partnership, as such agreement
may be amended from time to time.
"Restricted Payment" shall mean any Distribution (as defined below) in
respect of the Company or any Subsidiary thereof (other than on account of
capital stock or other equity interests of a Subsidiary owned legally or
beneficially by the Company or another Subsidiary), including any Distribution
resulting in the acquisition by the Company of securities that would constitute
treasury stock. As used in this definition, "DISTRIBUTION" shall mean, in
respect of any corporation, partnership or other business entity (a) dividends
or other distributions or payments on capital stock or other equity interest of
such corporation, partnership or other business entity (except distributions in
such stock or other equity interest) and (b) the redemption or acquisition of
such stock or other equity interests or of warrants, rights or other options to
purchase such stock or other equity interests (except when solely in exchange
for such stock or other equity interests).
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"Senior Credit Facility" has the meaning set forth in the Renewal Note
Agreement.
"Subsidiary" shall mean with respect to any person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such person.
Section [ ]. The Utah Control Shares Acquisition Act, section 61-6-1.
et seq, Utah Code Annotated, and any amendatory, replacement or successor
statute of like tenor or purpose, shall not apply to control share acquisitions
of shares of the Corporation.
